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U.S. Corn Crop Gets Bigger, USDA Says

Soybean market closes double-digits lower.

DES MOINES, Iowa --The U.S. farmers harvested bigger corn crops than expected, soybeans about the same, according to the USDA Thursday.

As a result of the USDA Reports, the CME Group’s farm markets closed mostly lower.

At the close, the December corn futures finished 6¾¢ lower at $3.41. March futures finished 6½¢ lower at $3.54¾.

January soybean futures finished 12¼¢ lower at $9.86. March soybean futures closed 12¼¢ lower at $9.97.

December wheat futures closed 2¼¢ higher at $4.29.

December soy meal futures finished $3.40 per short ton lower at $311.80. December soy oil futures closed 0.23¢ lower at 35.14¢ per pound. 

In the outside markets, the Brent crude oil market is $0.47 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 120 points lower.

U.S. 2017 Yields

In its November Crop Production and Supply/Demand Reports, the governmental agency pegged the U.S. 2017 corn yield at 175.4 bushels per acre vs. the trade’s expectations of 172.4 bushels per acre and the USDA’s October estimate of 171.8.

This would be a crop size of 14.578 billion bushels.

For soybeans, the U.S. 2017 yield is pegged at 49.5 bushels per acre, compared with the trade’s expectations of 49.3 bushels per acre and the USDA’s 49.5 estimate last month.

This would be a crop size of 4.425 billion bushels.

U.S. Ending Stocks

For corn, the 2017/18 ending stocks are estimated at 2.487 billion bushels vs. the trade’s expectations of 2.366 billion bushels and the USDA’s October estimate of 2.340 billion bushels.

The 2017/18 U.S. soybean ending stocks are pegged at 425 million bushels vs. the trade’s expectations of 420 million and the USDA’s October estimate of 430 million.

Also, the USDA pegged the wheat ending stocks at 935 million bushels vs. the trade’s expectations of 957 million and the USDA’s October estimate of 960 million.

Trade Response

Al Kluis, Kluis Commodities, says this report has big numbers, keeping pressure on the market.

“They are negative numbers, but you have to keep throwing bearish information at this market to keep it down. Though the report included big numbers, markets have not responded that negatively.”

Cory Bratland, Kluis Commodities broker, was surprised that the USDA raised U.S. corn expectations for this marketing year.

“USDA bumped up corn exports by 75.0 million bushels. We have not been selling as much corn as we would like. Yes, this week’s sales were large, but not until this week have we seen those kind of numbers. We’ll have to get to work, if we are going to reach those government goals,” Bratland says.

Jack Scoville, The PRICE Futures Group’s senior market analyst, says that there is nothing bullish for the corn numbers. 

“Yields were bumped higher than expected, increasing production and a nice bump in ending stocks. Beans not so bad, but not bullish from what I can see,” Scoville says. 

USDA’s production numbers came in a bit above trade expectations, yield up a little more than expected, ending stocks not so far out of line, Scoville says.  

“But the corn data is bearish and the bean data is less bearish, but still bearish. I think we will close lower today. Demand for corn should increase on the way down, so the downside should be limited. Beans made it above $10.00, basis January again, and are failing again. So, soybeans should close a little lower based on these numbers. Should keep things on the slow side for now,” Scoville says.

Jason Ward, Northstar Commodity Research analyst, says that the takeaway from the report today is the corn data was bearish, more so than anyone did or could imagine.

“Now we will watch the close of today’s market to see if it builds in the one bullish piece of the report; the World Ending Stocks in corn are seen as the lowest since 2014, and believe it or not, we are 23 million metric tons below last year in World Corn Supply,” Ward says.

Ward adds, “Many have called and asked why corn is not trading lower than 4¢ to 5¢ lower, and the answer is still that funds are already holding near-record short positions, and producer selling at these price levels will remain very slow.” 

Sal Gilberti, Teucrium Trading founder, says that the surprisingly large record corn yield and the uptick in wheat usage were really the only things of note in today’s report.

“However, the market’s somewhat muted reaction to this outwardly bearish report is perhaps the most telling thing about today’s WASDE.”

Gilberti adds, “Traders must be asking themselves if there could possibly be any new information lurking this late in the season to validate the short positions many currently hold. Seasonally, in the corn markets, there is reason for shorts to exercise extreme caution and for end users to consider fulfilling some of their forward purchase requirements within the current lower price range.”     

Jason Roose, U.S. Commodities grain analyst, says that the November USDA Crop Production Report continued to focus on supply.

“For the third month in a row, the yield increased on corn to 175.4 bushels per acre. If this yield stands, it will be recorded as the largest corn yield in U.S. history,” Roose says.

Roose adds, “Bullish news was limited with the increased corn production in the U.S. at 14.58 billion bushels and increase in world corn production at 203.9 million metric tons.” 

 

 

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